Expectations for Technology Recovery Keep Getting Pushed Back

Expectations for Technology Recovery Keep Getting Pushed Back

Article excerpt

SAN JOSE, Calif. -- When the dust cleared last year from the dot-
com meltdown, many in the technology industry hoped for recovery by
now. Later, with indicators still flagging, the talk was of a late
2002 rebound.

But here at the half-year mark, with earnings warnings from the
likes of Intel, Apple Computer and Oracle, the tech sector might
soon be adopting the attitude of baseball fans whose teams drop out
of the pennant race: Wait `til next year.

Investors certainly are pessimistic. The tech-heavy Nasdaq Stock
Market index fell to its lowest level of the year Thursday is down
25 percent in 2002.

The reasons are clear. Many corporations are getting by without
upgrading their existing technology, especially computers and other
hardware.

The businesses that are making purchases have been getting
bargain prices and demanding more proof that new technologies will
save them time and money in the long run.

"There's just so much resistance to spending," said Michelle
Johnson, head of solutions marketing for Volera, a subsidiary of
Novell that helps companies manage content on their networks. "If
it's a new technology the CTO (chief technology officer) or CEO
hasn't seen before, it's called into question."

As a result, she said, the stance many corporate technology
directors take is: "We'll spend on stuff we have to do -- all that
newfangled stuff I'd like to do, I'll hold off on."

The overall economy is recovering from last year's recession, but
many big businesses assembled their 2002 technology budgets last
summer, when doubts were higher. That means "projects for this year
are locked and loaded," and many new purchases must wait, said Al
Case, a senior vice president at Gartner Inc. who directs surveys
about corporate technology spending. He predicts an improvement in
the second half of 2003.

Last month, Gartner forecast that information-technology spending
would increase a slim 1.5 percent this year. Another research firm,
Giga Information Group, predicted spending would stay flat.

Not surprisingly, several sectors are slumping.

Oracle, a business software giant, beat analysts' forecasts with
its quarterly earnings Tuesday but warned that the next set of
results would be below expectations. Adobe Systems Inc., a leading
maker of publishing software, also lowered sales and profit targets
this month.

Continued cost-slashing in the troubled telecommunications
industry is creating headaches for network equipment providers that
grew fat in the 1990s Internet mania. …